January 2 – The new year might have just rung in, but the news for buyers of retirement real estate is the same – buyers are cautious as inventory piles up, sales slow down drastically, and prices come down only slightly. A dire New Year’s Day front page headline in the Miami Herald screamed about “Home Sales and Prices” being in a “Nosedive”. But aside from the softness in the market for retirement communities, another worry has emerged – unfullfilled promises and communities.
One of the worst things that can happen to spoil an active adult community dream is to have important planned amenities not materialize. For example; a sleek clubhouse, 2nd golf course, or extra swimming pools that are promised – but don’t get built. Unfortunately the list of bad things that can happen doesn’t stop there. A builder may find that it is so strapped for cash it must sell off extra property, and the community loses control over what gets built there. One just has to read the newspapers to find out new problems one hadn’t even thought about.
Making the news in late December in the Maryland Daily Record were the woes of D.R. Horton Inc., which was sued by MTBR LLC for allegedly breaching a 2004 agreement to purchase 3 land parcels. The land was supposed to be part of the Bulle Rock complex near Maryland’s Havre de Grace. D.R. Horton Inc. is the nation’s 4th largest builder and just had its first loss in 15 years. Most of of the affected lots were targeted to be single-family houses.
Back in November a division of Levitt made news when the giant builder laid off more than 200 workers, defaulted on loans, and stopped building. Affected projects include Florida active adult communities such as the Seasons at Tradition (Port St. Lucie), the Cascades development in Sarasota, the Cascades at World Golf Village in St. Augustine. Projects in Georgia, South Carolina, and Tennessee have also been halted. One of the ones in South Carolina is its Murrells Inlet project, Seasons. As detailed in a New York Times article, “With Builder in Bankruptcy, Buyers Are Left Out“, residents of that community are upset by the many unfinished or unbuilt homes, including an unfinished community center.
Obviously, finished and more established communities would appear to be safer from problems with failure to deliver. But ample due diligence is always a good practice even before buying in a completely built out community (see 10 Questions to Ask Before You Buy). Most people rely on their attorneys to do a lot of that work.
Reputable sellers and developers encourage buyers to study all disclosure documents carefully. They have usually put protections, such as bonds and escrow funds, in place to protect buyers. They also want happy buyers, because bad publicity is so damaging and good word of mouth so helpful. Just make sure you take the effort to ask all the right questions – before you sign on the dotted line.